Pipeline operator South Bow says tariffs could create challenges in its marketing segment

Lauren Krugel · The Canadian Press

· Posted: Mar 06, 2025 2:27 PM EST | Last Updated: 2 hours ago

South Bow Corp., the lipid pipeline relation spun disconnected from TC Energy Corp. past year, says its selling segment, which provides transportation, retention and logistics services, could travel nether unit if a 10 per cent tariff connected U.S. vigor exports persists.

The levy imposed this week, and Canadian counter-tariffs against the U.S., person caused volatility successful the terms quality betwixt dense Canadian and airy U.S. crude prices, said the Calgary-based company.

"Persistence of this uncertainty whitethorn make further headwinds for uncommitted capableness connected South Bow's pipeline systems and interaction South Bow's selling conception results," South Bow said successful its inaugural fiscal study arsenic an autarkic company, released precocious Wednesday.

On Tuesday, a 10 per cent tariff connected vigor shipments into the United States came into effect, with a 25 per cent levy connected each different goods. U.S. President Donald Trump signed an enforcement bid Thursday pausing tariffs connected immoderate imports linked to the car manufacture and lowering tariffs connected potash, a fertilizer successful precocious request for American farmers, to 10 per cent.

South Bow main enforcement Bevin Wirzba told analysts connected a league telephone Thursday that determination was a alteration successful lawsuit behaviour successful anticipation of imaginable tariffs, since they person to determine a period successful beforehand wherever to nonstop their barrels.

"The different options for our customers are to permission those barrels successful storage, oregon determination them eastbound oregon west," Wirzba said.

"So we expect that volition proceed to beryllium a headwind arsenic agelong arsenic tariffs are successful place, arsenic it provides different inducement for customers to see different options than moving their barrels south."

South Bow said it has chopped its 2025 outlook for normalized net earlier interest, taxes, depreciation and amortization successful its selling conception by astir $30 cardinal compared with 2024, owed successful portion to the marketplace uncertainty resulting from tariffs.

Other factors successful the changed outlook see pipeline capableness exceeding the proviso of lipid coming retired of Western Canada and the unwinding of immoderate hedging positions.

South Bow shares dropped much than 10 per cent connected the TSX connected Thursday to $35.18.

During the past 3 months of 2024, South Bow reported normalized nett income of $112 million, compared with $94 cardinal during the aforesaid play a twelvemonth earlier erstwhile its concern was inactive portion of TC Energy.

That amounted to 54 cents per share, compared with 45 cents per share.

Revenue successful the 4th dropped to $488 cardinal from $540 million.

Last week, U.S. President Donald Trump posted connected Truth Social, the level helium owns, that he'd similar to spot the revival of the Keystone XL lipid pipeline, which would person allowed much oilsands crude to travel to the U.S. Gulf Coast.

TransCanada Corp., which changed its sanction to TC Energy astir six years ago, archetypal projected the task successful 2008, kicking disconnected a years-long saga that saw aggravated biology absorption and pitched governmental and ineligible battles.

The Keystone XL task — a 1,900-kilometre pipeline that would person tally from Hardisty, Alta., to the large U.S. crude retention hub astatine Cushing, Okla., and past connected to Gulf Coast refineries — was archetypal projected during the Obama administration, which rejected it connected biology grounds.

It was past revived nether the archetypal Trump administration, earlier erstwhile president Joe Biden killed it again by revoking the pipeline's licence connected his archetypal time successful the White House successful 2021.

South Bow, which present owns the existing Keystone system, has said it has "moved on" from the XL enlargement and is looking astatine different ways to service customers.